In-House Marketing vs eCommerce Agency (when to switch)

So you're running an ecommerce brand. You've hustled your way to getting some real traction, and things are starting to get pretty serious.

Inevitably, you come face to face with one of the most timeless questions for ecommerce brands: Do you build your marketing team in-house or hire an agency?

Obviously, there's no one-size-fits-all solution here, and the answer to the question is actually going to evolve as your brand evolves.

So, in this post, we're going to talk about the various stages of growth that your brand will go through and how you may, along the way, change your strategy to adapt to different circumstances as you're growing.

Prefer to watch? Check out the video.

Survival Mode (<$30K monthly sales)

So, in the beginning, you're in the early stages of your brand. Let's call this Survival Mode.

You probably fall into this bucket if you're doing, let's say, less than 30K of sales a month. 

At this stage, every dollar counts, and you don't have a lot of profit left over, so hiring someone full-time is kind of out of reach.

You want to stay as lean as possible, so you don't want the significant fixed cost of having a full-time employee. 

On top of that, at this really early stage, you're not even fully sure that the brand has the potential to scale and go all the way.

Want to better understand your brand's growth potential? Check out my video on how to make an ecommerce financial forecast - it'll help clarify where you stand and where you could go.

While it's still an accomplishment to be able to get to 30K a month in sales, it doesn't necessarily mean that the brand has the potential to 10x that.

So, at this stage, agencies are probably going to be the better bet. 

You can get access to specialized skills like creative media buying and copywriting without the overhead of full-time salaries. 

And if you work with an agency that has experience with launching brands from scratch, then they'll be able to help you pick the right marketing channels and build a strategy from the ground up.

The beauty here is that you have flexibility. 

You can work with them on a much smaller scale, and if they're not performing, it's a lot easier to fire an agency than a full-time employee.

Now, ideally, as the founder of an ecommerce brand, you should be learning how to do some of the marketing yourself. 

Marketing is such an integral part of running an ecommerce brand that not understanding it is a pretty big blind spot. 

The better you understand it, the better you're going to be able to manage agencies and employees in the future.

But I understand it's not a strong suit for everybody, so definitely, agencies are a good route to go down here.

Growth Mode (~$300K monthly sales)

All right, so now let's fast forward. You've found some traction. 

Your brand's gone from, say, 30K to 300K. You've found product-market fit. 

Now you're looking to optimize and scale. Let's call this stage Growth Mode. 

Now the stakes are a little bit higher because you're working with bigger dollar numbers. 

You're not just testing out different marketing channels and dabbling; you need consistent execution.

You may be inclined to now bring in a full-time hire because of the fact that you can afford it, but there is still a case for agencies here.

Agencies can help you maintain momentum while you're scaling up or down, and they'll usually still be more cost-effective than bringing on a full team. 

Remember, the work will require multiple people; it's not easy to have one person come in full-time and replace all of the Facebook ads work that an agency does.

However, because you can afford it, it might make sense to bring in somebody in-house. 

Maybe you feel like you haven't been getting consistent performance from the various agencies, and you kind of lose momentum every time you have to switch. 

An in-house hire can give you more dedicated attention than an agency would.

But keep in mind, in the same way that it's difficult to hire a good agency, it's difficult to hire a good full-time person.

So oftentimes, this is where the hybrid approach can make sense, where you have one person come in-house who is managing multiple agencies.

For a person to succeed in this role, though, they should have enough understanding of the various mechanics of the channels that the agencies manage, but they should also be humble enough to appreciate that the agency will have certain expertise that they're bringing to the table.

Where I've often seen this sort of relationship break down is when the in-house person has a little bit of an adversarial relationship with the agencies, thinking that they could do their job better.

Want to get to the next stage? Check out The Boring Guide to Scaling Your eCommerce Brand - because sometimes the most effective scaling strategies aren't flashy, they're just damn reliable!

Scale Stage (>$500K monthly sales)

Let's say now your brand is really continuing to grow. 

Things are moving fast. You're doing well over 300K a month. 

While there's still a ton more room to grow, we can call this the beginning of the Scale Stage.

Marketing complexity is likely going to increase because you're going to be working on multiple channels, and the volume of work in each channel is going to go up too.

At this stage, the cost-benefit of agencies can start to tip a little bit more in favor of the in-house person. 

Agency fees will often scale in some form or another with the amount of output or volume of ad spend. 

So being able to bring in more and more of those pieces in-house full-time can be a little bit more economical and a little bit more strategically advantageous as well.

Having an in-house team means that you'll have more control over your brand's voice, you'll have faster communication, and you can execute on decisions and pivot pretty much on the fly.

Also, when you're playing the game in a bit more of an advanced ad spend level, then there's a lot more thinking outside the box that's necessary. 

The usual playbooks won't always work. 

Having a person who's in-house, who's dedicated to your brand, and who can spend all of their mental space on thinking about how to help your brand succeed can be very valuable.

While agencies are great, realistically, they are incentivized to try to get you the best results for the least amount of attention possible.

So you're not always going to get the same level of attention and outside-the-box thinking from them.

However, the hybrid model can still work very well here. It might just be a little bit modified from the previous stage. 

For example, a common approach is to bring in entire functions, like having all the media buying done in-house.

However, a lot of the creative generation can still be done by multiple agencies. 

That way, you get the biggest amount of creative diversity and a lot of new ideas flowing into the ad account.

You get to the benefits of the creativity coming from an in-house individual who dedicates all of their headspace to your brand, as well as the creativity of multiple agencies working on multiple different industries and bringing a lot of different new ideas that the in-house person might just not be exposed to.

Agency vs In-House: Overall Factors to Consider

Okay, so while that may give you a good rule of thumb for how to think about things as you grow through various stages of growth, let's take a step back and consider the overall factors you might want to consider during this conversation.

Cost Considerations

So we talked about cost. In the early stages, you can fractionally get more talent for less committed cash, so agencies are good there. 

But as you scale and once you can afford it, a full-time hire is generally going to give you more output for a certain amount of cost.

Expertise and Skill Sets

You've also got the various skill sets and expertise that you need. 

Agencies tend to have higher skill levels, a broader team, and access to more expertise just across the various people that work there.

They'll oftentimes have better resources available and are often going to be better at problem-solving just because of the diversity of the experiences they have working with so many different brands.

In-house hires will often need to be generalists, especially in the early stages, which often won't give you great ROI on your ad spend, though you can hire the specialist later on when you're bigger.

Plus, agencies do tend to have a little bit more turnover internally, so that can affect your continuity because of the team that you're working with. 

But in-house, oftentimes you'll have good continuity from that person.

Scalability and Flexibility

Agencies are often easier to onboard than a full-time person because they have good onboarding processes, and they're also easier to fire than a full-time employee.

But on top of that, if an agency offers multiple services, you can get benefits from those additional services, even if you need them for limited projects, rather than if you were trying to ask a full-time person to do that.

On the flip side, an in-house person can oftentimes be more flexible because they don't necessarily need to have these rigid processes that an agency might. 

They can often just do whatever they need to do because they don't have to follow a consistent process across a lot of different clients.

Control and Communication

When it comes to control and communication, that can be a little bit more limited with an agency because they are an external entity.

An in-house person can operate exactly the way that you want them to, and they'll oftentimes be a lot more responsive as well. 

Though if you absolutely need extremely high responsiveness, then that might be indicative of some other operational issues too.

Creativity Considerations

There's also the creativity side of it. 

Agencies will have a lot more creative diversity just because they're exposed to a lot of different industries, and they have full-time people whose job is to just be creative and look at ads all day.

While an in-house person can also be creative, if they have a lot of other responsibilities, sometimes the stress of all that other work can stifle the creativity.

That being said, thinking about your brand all day can lead to better ideas than if you're just thinking about your brand for 5 to 10 hours a week as an agency.

Accountability and Performance

There's also the question of accountability and performance. Agencies generally know that their contract depends on delivering good results.

They'll oftentimes feel the pressure more intensely than an in-house person just because of the fact that they know they can be fired at any moment. 

Their entire existence depends on constantly giving good performance, so that's what they're going to be focused on.

That being said, you do have to hold them accountable. There are plenty of agencies that will benefit from a negligent founder.

With in-house people, accountability is a bit more nuanced.

The person is a member of your team, and oftentimes that relationship and perspective can mean that founders will hold them to a bit of a lower standard than they might an agency.

It can be especially challenging in a hybrid situation because oftentimes the in-house person will just blame the agency for bad performance. 

On the flip side, generally speaking, in-house people will care more about actually delivering results.

So, navigating this issue effectively does require good measurement and KPI practices to hold everybody accountable.

When to Switch from an eCommerce Agency to In-House Marketing?

But at the end of the day, for your brand, it's all about maximizing ROI, and as your brand grows, you'll probably have to evolve and evaluate whether or not the current model suits your brand best.

For a very significant portion of your brand's growth story, you're probably going to be just using different configurations of a hybrid model.

So hopefully, some of the points we discussed will help you think about what to consider when making a decision one way or the other. 

But if you have any questions or want some personalized advice for your situation, feel free to reach out.

In the meantime, if you're thinking about hiring someone in-house, you might enjoy this video about why that person probably shouldn't come from a very large corporation.